“Counter-Balancing” Not Achieved When 2/3rd Members Of The Arbitral Tribunal To Be Appointed By One Party: Delhi High Court
1 year, 8 months ago

“Counter-Balancing” Not Achieved When 2/3rd Members Of The Arbitral Tribunal To Be Appointed By One Party: Delhi High Court

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The Delhi High Court has ruled that where a party is required to appoint an arbitrator from a panel made by the other contracting parties, it is mandatory for the panel to be sufficiently broad based, in conformity with the principle laid down by the top court in Voestalpine Schienen Gmbh vs. Delhi Metro Rail Corporation Ltd, 4 SCC 665. Consequently, Margo filed a Section 11 petition before the Delhi High Court seeking constitution of an independent arbitral tribunal consisting of three arbitrators. The bench thus ruled, “Such a panel is clearly restrictive and is manifestly not “broadbased” and therefore, impinges upon the validity of the appointment procedure prescribed in clause 3.37 of the RFP.” The court added that where a party is required to appoint an arbitrator from a panel made by the other contracting parties, it is mandatory for the panel to be sufficiently broad based, in conformity with the principle laid down by the top court in Voestalpine. While concluding that the panel offered by RailTel was restrictive and not broadbased, the bench said, “The same adversely impinges upon the validity of the appointment procedure contained in clause 3.37, and necessitates that an independent Arbitral Tribunal be constituted by this Court.” The bench further remarked that the “counter balancing” as contemplated in Perkins, cannot be said to have been achieved in a situation where one of the parties has a right to choose an arbitrator from a panel, whereas the remaining 2 out of 3 arbitrators are appointed by the other party.

History of this topic

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